While we all recognize the importance of supply and demand in the business world, it’s important to go further into what it means in terms of reaching your objectives. Basic economics like supply and demand should apply to you whether you run a seasonal business, buy a property for passive income, or run a more traditional business. “Supply and demand” is an economic theory that explains how sellers and buyers of a resource interact. Price and volume of commodities exchanged in markets are influenced by supply and demand.
Even if you’re not thinking about supply and demand in those terms, as a small business owner, you’re always thinking about it. For example, you’re attempting to figure out if people will buy a new product you’re producing, or if you have enough units on hand to complete all the orders customers placed after a marketing campaign. Several factors influence the supply and demand for products and services, but the most important is price. In general, when the price declines, demand rises. It’s the philosophy that reinforces Black Friday. Customers are attracted to stores that provide exceptional prices on items.
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